How To Remove A Trustee In Ontario: Lessons From Reid v Cote

What happens when a trustee decides that a deceased person’s estate plan was unfair and quietly takes matters into his own hands? 

A 2025 Ontario Superior Court decision, Reid v. Cote (2025 ONSC 6542), answers that question with unusual force. The trustee was removed, the unauthorized transfer was voided, and he was ordered to pay over $112,000 in costs personally. 

Ailean Reid was a successful Ottawa businesswoman who died on January 23, 2022. Through decades of work in property management, she had accumulated significant wealth: much of it tied up in a company called Darail Holdings Ltd. and in a long-term lease project at 489 Sussex Drive in Ottawa.

Ailean’s common law partner of over thirty years was D’Arcy Cote. She named him executor of her estate and trustee of three trusts, including the Reid Family Trust Number Two (RFT2).

 The RFT2 held ten common shares in Darail: the shares that carried most of the long-term economic value of the estate.

The trust was designed with a clear purpose: to provide income to Ailean and D’Arcy during their lifetimes, with the common shares ultimately passing to Ailean’s daughter, Jacqueline Reid, on the deaths of both Ailean and D’Arcy. Jacqueline was Ailean’s only child. 

D’Arcy’s children from his first marriage, Patrick and Samantha Cote, were not beneficiaries of the RFT2.

D’Arcy believed that Ailean had always intended her estate to be divided 50-25-25 between Jacqueline, Patrick, and Samantha. 

He felt that changes Ailean made to the corporate structure in 2018, that is, transferring shares between entities, had produced an outcome inconsistent with her true wishes. He sought legal advice, was told that redistributing the RFT2 assets to achieve a 50-25-25 split would not be consistent with the intent of the trust reorganization, and should not be done.

He proceeded anyway.

On January 1, 2024, D’Arcy transferred five of the ten common shares in Darail from the RFT2 to himself, as both trustee and beneficiary of the trust. 

His stated purpose was to benefit Patrick and Samantha: people who were not beneficiaries of the RFT2 at all. He did not notify Jacqueline for nine months. He did not obtain the required CRA advance ruling. He did not disclose the transfer on Darail’s tax return, which he then certified as accurate. He did not record the transfer in Darail’s minute book.

The RFT2 granted the trustee broad powers, including “complete and unfettered discretion” to distribute both income and capital of the trust as the trustee saw fit, and the authority to administer the trust as though she or he were the “sole owner” of the trust fund.

D’Arcy argued this language gave him the authority to make the transfer. The court rejected that argument.

Justice Jensen relied on the Ontario Court of Appeal’s foundational decision in Fox v. Fox Estate (1996), which established that even absolute discretion in the exercise of trustee powers is not without limits. 

Courts may intervene when a trustee:

• Acts on considerations that are extraneous to the purpose of the trust;

• Fails to take into account considerations that are actually relevant; or,

• Uses trust property as though it were their own, without regard to the settlor’s intentions.

The court found all three problems present. 

D’Arcy was not acting to benefit the RFT2 beneficiaries. He was acting to benefit his own children, who had no entitlement under the trust at all. 

The trust agreement was clear: on the distribution date, the common shares were to pass to Jacqueline. 

Ailean had implemented her 2018 restructuring deliberately, with legal and accounting advice. 

D’Arcy signed the resolution giving it effect. His belief that her plan was unfair did not authorize him to override it.

As the court put it: D’Arcy was not permitted to use trust assets as his own to correct what he believed was a mistake on Ailean’s part.

Ontario courts do not remove trustees lightly. The governing principles, drawn from cases like Radford v. Radford Estate, require clear necessity, not mere friction or disagreement. The court’s primary concern is the welfare of the beneficiaries. Removal is justified when:

• Past misconduct is likely to continue;

• The trustee has an obvious conflict between personal interest and fiduciary duty;

• The trustee cannot be trusted to act impartially;
  

• The estate or trust assets are at risk if the trustee remains.

In Reid v. Cote, the grounds for removal extended well beyond the unauthorized share transfer. By the time the matter was heard, Justice Jensen had catalogued eleven separate categories of misconduct, including:

• Failing to notify Jacqueline of the share transfer for nine months;
  

• Draining Darail’s operating account of approximately $220,000 in unexplained withdrawals, some of which were routed to what the court called a “mystery account”;
  

• Apparently diverting a $48,275 dividend cheque intended for Darail into a personal account;
  

• Defaulting on pre-authorized insurance premium payments on two significant life insurance policies;
  

• Failing to call a single shareholder meeting since Ailean’s death;
  

• Repeatedly refusing to provide an accounting to Jacqueline or her counsel;
  

• Signing a shareholders’ agreement without reading it, then repudiating it;
  

• Failing to comply with multiple court orders, including an order to redeem Jacqueline’s preferred shares.

The court found that any one of these failures would have been sufficient to justify removal. Collectively, they demonstrated, in Justice Jensen’s words, a “shocking lack of fidelity” to D’Arcy’s obligations as trustee and executor.

The court voided the share transfer and declared that the RFT2 continued to hold all ten common shares in Darail.

D’Arcy was ordered to return the five shares, and any profit made on them, or to pay equitable compensation if return was not possible.

He was also ordered to pass his accounts as executor and trustee, and to repay to the estate and trusts any amounts found to have been misappropriated.

On costs, the court departed from the usual rule that estate litigation costs are borne by the estate. 

As D’Arcy had acted unreasonably and for his own benefit rather than the estate’s, he was required to pay Jacqueline’s costs of $112,047.24 from his own pocket. He was not permitted to draw on estate or trust funds to satisfy the award.

If you are a beneficiary of a trust or estate in Ontario and you suspect that the trustee is acting in their own interest, mismanaging assets, or refusing to account for their administration, you have legal recourse.

Courts take these obligations seriously. A trustee’s refusal to provide information or comply with requests is itself a possible breach of fiduciary duty; you do not need to wait for assets to disappear before seeking relief.

If you are a trustee, broad discretionary language in a trust document does not insulate you from court oversight. You must act within the purpose of the trust, not on the basis of your own sense of fairness or family loyalty. 

At Pinto Shekib LLP, we act for beneficiaries and estate trustees in disputes involving breach of fiduciary duty, trustee removal, and contested estate administration in Ontario. If you have concerns about how an estate or trust is being managed, contact us at 416.901.9984 or info@pintoshekib.ca to discuss your options.